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MobileIron Inc. Stock Crashes on Guidance Cut

What investors need to know about Mobile Iron's new guidance.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of MobileIron(NASDAQ:MOBL), a provider of mobile IT solutions for enterprises, crashed on Thursday when the company cut its first-quarter revenue guidance. Along with the guidance cut, MobileIron also announced that CFO Todd Ford would be leaving the company. The stock was down nearly 30% by 11 a.m. Thursday.

So what: MobileIron now expects first-quarter revenue to be in the range of $32 million to $33 million, below previous guidance calling for revenue between $34 million and $37 million. CEO Bob Tinker gave the following explanation in the company's press release: "Near the end of the quarter, we witnessed multiple large deals from North American customers that did not close as expected. Further, we saw a large shift by customers to our monthly subscription offering, which resulted in lower billings and revenue."

Given the new guidance, revenue growth during the first quarter is now expected to be between 14% and 18%. The company's revenue growth rates in 2013 and 2014 were 159% and 25%, respectively.

The company said Ford is resigning to join another company and his departure "is not based on any disagreement with the company’s accounting principles or practices or financial statement disclosures."

Now what: MobileIron faces a tremendous amount of competition from a slew of big technology companies including Microsoft, IBM, and BlackBerry, and the large deals that the company failed to close during the first quarter may have gone to the competition.

MobileIron has never turned a profit, and its free cash flow has been consistently negative. The company had $118 million in cash on the balance sheet at the end of 2014, largely from its IPO last year, but this cash is quickly dwindling. At the current rate that MobileIron is burning cash, the company will need to raise money within the next 2-3 years in order to stay afloat, assuming things don't get worse.

The market severely punished MobileIron for a small guidance cut, signaling that the stock's valuation may be on its way back to reality. Revenue growth is slowing, losses are piling up, and the company is having trouble closing important deals. None of this bodes well for the future of the company or the stock.